New research published by the ABI (Association of British Insurers) shows that a majority of young people in the UK are not planning for their long term financial future.
The ABI found that fewer then half of under 30s are saving for a pension. This compares with over seven out of ten of those born in the 1960’s who had some kind of pension provision by the time they reached 30.
Under 30s also have little confidence in the government’s pensions policies, with a widespread belief that there would be little or no state pension by the time they retired.
“It’s understandable that with all the financial pressure young people face today, they find it difficult to plan decades ahead,” said the ABI’s Joanne Segars.
“But this does not mean that the Government, savings industry and employers must simply give them up as a lost cause – it’s entirely the opposite.”
“The Government must highlight incentives such as tax relief, the savings industry must go to greater lengths to explain pensions and employers must encourage employees to save.
“In fact one of the only differences between savers and non savers was that savers tended to belong to pensions schemes that also received an employer contribution."
The research found that any evidence of saving tended to concentrate on the short term and be aimed at specific goals such as a holiday or a wedding. The majority of young people displayed little awareness of the importance of saving for retirement and securing their long-term financial future.
Even when forced to consider this option, they systematically underestimated the amount needed to generate a reasonable retirement income.
Most of those questioned displayed only a basic level of knowledge of pensions and a minority who could not even distinguish between state and private provision. Many were also surprised at the level of tax relief available for pension contributions.